Mrs Day Structures a Transaction to Shift Income from Her

question 47

Multiple Choice

Mrs. Day structures a transaction to shift income from her 20Y1 tax year to her 20Y2 tax year. This tax planning strategy may be taking advantage of the:

• A) Entity variable
• B) Time period variable
• C) Jurisdiction variable
• D) Character variable

---

Definitions:

Long Position

A financial strategy where the investor purchases a security with the expectation that its value will rise over time.

Futures Contract

A standardized legal agreement to buy or sell a particular commodity or financial asset at a predetermined price at a specific time in the future.

Clearinghouse

Established by exchanges to facilitate transfer of securities resulting from trades. For options and futures contracts, the clearinghouse may interpose itself as a middleman between two traders.

Taxation

The process whereby authorities impose financial charges on individuals or legal entities, which can have implications for investment decisions.